What is ‘Lockbox Banking’

Lockbox banking is a company presented by banking companies to corporations for the receipt of payment from clients. Below the company, the payments manufactured by clients are directed to a special post business box in its place of going to the business. The bank goes to the box, retrieves the payments, processes them and deposits the funds immediately into the firm’s bank account.

BREAKING DOWN ‘Lockbox Banking’

As with most payment processing solutions, there are both professionals and downsides to lockbox banking. It delivers corporations with a pretty productive way of depositing shopper payments. This is in particular valuable if a business is unable to deposit checks on a timely foundation or if it is regularly receiving shopper payments via the mail.

On the other hand, lockbox banking can also be pretty dangerous. Bank employees who have accessibility to lockboxes are hardly ever supervised, which opens up the scenario to possible fraud. The fraud primarily takes place in the form of check counterfeiting, for the reason that the checks that are in the lockboxes give all the info necessary to make counterfeits. A business can guard alone from this sort of fraud by using a bank that it trusts and by regularly monitoring its lockbox.

How Lockbox Banking Functions

For businesses that acquire a significant volume of payments or significant-denomination checks accompanied by remittance paperwork, a lockbox arrangement can streamline collections and payment processing. Making use of superior lockbox technological know-how, banking companies have recognized multiple communication hubs for businesses to use to acquire payments and deposits.

A business establishes a post business box to acquire payments from clients. The bank couriers the day’s deposits and communications to its processing heart. The business’s remittance paperwork are scanned, payment info is captured, and clearing updates are transmitted to its accounts receivable. Every evening, the business’s lockbox info is backed up for secure storage and effortless accessibility.

How Corporations Profit From Lockbox Banking

Corporations using lockbox banking can substantially lower their inner processing expenses, speed up collections and transform their receivables into dollars more quickly. There is no want for the businesses to get ready their have bank deposits or keep accounting data for the reason that that is done quickly via lockbox banking.

Part of the lockbox processing is done on a day-to-day foundation, so businesses can enhance their command and efficiency in receivables administration although bettering audit controls and info stability. Corporations reward from increased reporting abilities with day-to-day accessibility to deposit amounts, fund availability and payment info, like digital photos of processed payments and discount codes.